The Experts below are selected from a list of 5055 Experts worldwide ranked by ideXlab platform
Allen N. Berger - One of the best experts on this subject based on the ideXlab platform.
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a tale of two Bailouts effects of tarp and ppp on subprime consumer debt
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Onesime Epouhe, Raluca A. RomanAbstract:High levels of subprime consumer debt can create social problems. We test the effects of the TARP and PPP Bailouts during the Global Financial Crisis and COVID-19 crisis, respectively, on this debt. We use over 11-million credit-bureau observations of individual consumer debt combined with banking, bailout, and local market data. We find subprime consumers with more TARP institutions in their markets had significantly increased debt burdens following these Bailouts. In contrast, PPP Bailouts were associated with reduced subprime consumer debt. Findings are robust to addressing identification concerns, and yield policy implications regarding bailout structures and strings attached to bailout funds.
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the paycheck protection program ppp from the small business perspective did the ppp help alleviate financial and economic constraints preprint
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Paul G Freed, Jonathan A Scott, Siwen ZhangAbstract:Do business Bailouts help alleviate recipient firms’ financial and economic constraints, are effects strongest for the primary targets of the Bailouts, and are effects temporary or long-lasting? We address these questions for the Paycheck Protection Program (PPP) small business bailout during COVID-19. We analyze survey responses from small business owners for almost a year from the National Federation of Independent Business (NFIB) and Small Business Administration (SBA) data on PPP loans. Results suggest PPP loans significantly alleviated constraints, primarily for targeted firms – those in the most COVID-19-impacted industries, smaller firms, and firms in lower-income counties – but effects are temporary.
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whose bailout is it anyway political connections of small businesses vs banks in ppp Bailouts preprint
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Mustafa U Karakaplan, Raluca A. RomanAbstract:Economic agents pursue government funds using political connections, but it is sometimes unclear which types of connections and whose connections matter, and which agents have opportunities to benefit. We address these issues for the over one-half-trillion-dollar Paycheck Protection Program (PPP). Partisan political connections appear influential only for banks, nonpartisan connections work only for small businesses. Banks, rather than small businesses, had direct opportunities to apply for PPP funds. Banks benefited from higher profitability due to increased lending and competitive advantages, while existing research finds small businesses benefited. Thus, PPP bailed out both banks and small businesses, but through different connections.
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bank Bailouts bail ins or no regulatory intervention a dynamic model and empirical tests of optimal regulation and implications for future crises
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Raluca A. Roman, Charles P Himmelberg, Sergey TsyplakovAbstract:We model dynamic bank capital structure under three optimally-designed regulatory regimes dealing with potential default: bailout, where government provides capital; bail-in, using private-sector funds; and no regulatory intervention, allowing failure. Only under optimally designed bail-in do banks recapitalize during distress. Their pre-commitment to recapitalize reduces debt costs and increases debt capacity. No regulatory intervention is suboptimal for all agents. Optimal Bailouts and bail-ins generate no asset substitution-moral hazard behavior because regulators intervene at early stages of distress with sufficient capital remaining. Empirical tests of changes in capital behavior from the pre-crisis bailout period to the post-crisis bail-in period corroborate model predictions.
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unexpected effects of bank Bailouts depositors need not apply and need not run
ISSN: 2574-0997, 2021Co-Authors: Allen N. Berger, Raluca A. Roman, Martien Lamers, Koen SchoorsAbstract:A key policy issue is whether bank Bailouts weaken or strengthen market discipline. We address this by analyzing how bank Bailouts influence deposit quantities and prices of recipients versus other banks. Using TARP Bailouts, we find both deposit quantities and prices decline, consistent with substantially reduced demand for deposits by bailed-out banks that dominate market discipline supply effects. Main findings are robust to numerous checks and endogeneity tests. However, a deeper dive into depositor heterogeneity suggests nuance. Increases in uninsured deposits, transactions deposits, and deposits in banks that repaid bailout funds early suggest some limited support for weakened market discipline.
Raluca A. Roman - One of the best experts on this subject based on the ideXlab platform.
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a tale of two Bailouts effects of tarp and ppp on subprime consumer debt
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Onesime Epouhe, Raluca A. RomanAbstract:High levels of subprime consumer debt can create social problems. We test the effects of the TARP and PPP Bailouts during the Global Financial Crisis and COVID-19 crisis, respectively, on this debt. We use over 11-million credit-bureau observations of individual consumer debt combined with banking, bailout, and local market data. We find subprime consumers with more TARP institutions in their markets had significantly increased debt burdens following these Bailouts. In contrast, PPP Bailouts were associated with reduced subprime consumer debt. Findings are robust to addressing identification concerns, and yield policy implications regarding bailout structures and strings attached to bailout funds.
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whose bailout is it anyway political connections of small businesses vs banks in ppp Bailouts preprint
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Mustafa U Karakaplan, Raluca A. RomanAbstract:Economic agents pursue government funds using political connections, but it is sometimes unclear which types of connections and whose connections matter, and which agents have opportunities to benefit. We address these issues for the over one-half-trillion-dollar Paycheck Protection Program (PPP). Partisan political connections appear influential only for banks, nonpartisan connections work only for small businesses. Banks, rather than small businesses, had direct opportunities to apply for PPP funds. Banks benefited from higher profitability due to increased lending and competitive advantages, while existing research finds small businesses benefited. Thus, PPP bailed out both banks and small businesses, but through different connections.
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bank Bailouts bail ins or no regulatory intervention a dynamic model and empirical tests of optimal regulation and implications for future crises
Social Science Research Network, 2021Co-Authors: Allen N. Berger, Raluca A. Roman, Charles P Himmelberg, Sergey TsyplakovAbstract:We model dynamic bank capital structure under three optimally-designed regulatory regimes dealing with potential default: bailout, where government provides capital; bail-in, using private-sector funds; and no regulatory intervention, allowing failure. Only under optimally designed bail-in do banks recapitalize during distress. Their pre-commitment to recapitalize reduces debt costs and increases debt capacity. No regulatory intervention is suboptimal for all agents. Optimal Bailouts and bail-ins generate no asset substitution-moral hazard behavior because regulators intervene at early stages of distress with sufficient capital remaining. Empirical tests of changes in capital behavior from the pre-crisis bailout period to the post-crisis bail-in period corroborate model predictions.
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unexpected effects of bank Bailouts depositors need not apply and need not run
ISSN: 2574-0997, 2021Co-Authors: Allen N. Berger, Raluca A. Roman, Martien Lamers, Koen SchoorsAbstract:A key policy issue is whether bank Bailouts weaken or strengthen market discipline. We address this by analyzing how bank Bailouts influence deposit quantities and prices of recipients versus other banks. Using TARP Bailouts, we find both deposit quantities and prices decline, consistent with substantially reduced demand for deposits by bailed-out banks that dominate market discipline supply effects. Main findings are robust to numerous checks and endogeneity tests. However, a deeper dive into depositor heterogeneity suggests nuance. Increases in uninsured deposits, transactions deposits, and deposits in banks that repaid bailout funds early suggest some limited support for weakened market discipline.
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a tale of two Bailouts effects of tarp and ppp on subprime consumer debt
Research Papers in Economics, 2021Co-Authors: Allen N. Berger, Onesime Epouhe, Raluca A. RomanAbstract:High levels of subprime consumer debt can create social problems. We test the effects of the Troubled Asset Relief Program (TARP) and Paycheck Protection Program (PPP) Bailouts during the Global Financial Crisis and COVID-19 crisis, respectively, on this debt. We use over 11 million credit bureau observations of individual consumer debt combined with banking, bailout, and local market data. We find that subprime consumers with more TARP institutions in their markets had significantly increased debt burdens following these Bailouts. In contrast, PPP Bailouts were associated with reduced subprime consumer debt. Findings are robust to addressing identification concerns, and yield policy implications regarding bailout structures and strings attached to bailout funds.
Philipp Schnabl - One of the best experts on this subject based on the ideXlab platform.
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a pyrrhic victory bank Bailouts and sovereign credit risk
Journal of Finance, 2014Co-Authors: Viral V Acharya, Itamar Drechsler, Philipp SchnablAbstract:We model a loop between sovereign and bank credit risk. A distressed financial sector induces government Bailouts, whose cost increases sovereign credit risk. Increased sovereign credit risk in turn weakens the financial sector by eroding the value of its government guarantees and bond holdings. Using credit default swap (CDS) rates on European sovereigns and banks, we show that Bailouts triggered the rise of sovereign credit risk in 2008. We document that post-bailout changes in sovereign CDS explain changes in bank CDS even after controlling for aggregate and bank-level determinants of credit spreads, confirming the sovereign-bank loop.
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a pyrrhic victory bank Bailouts and sovereign credit risk
Social Science Research Network, 2011Co-Authors: Viral V Acharya, Itamar Drechsler, Philipp SchnablAbstract:We show that financial sector Bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy by ameliorating the under-investment problem of the financial sector. However, increasing taxation of the non-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the sovereign's creditworthiness. This deterioration feeds back onto the financial sector, reducing the value of its guarantees and existing bond holdings and increasing its sensitivity to future sovereign shocks. We provide empirical evidence for this two-way feedback between financial and sovereign credit risk using data on the credit default swaps (CDS) of the Eurozone countries for 2007-10. We show that the announcement of financial sector Bailouts was associated with an immediate, unprecedented widening of sovereign CDS spreads and narrowing of bank CDS spreads; however, post-Bailouts there emerged a significant co-movement between bank CDS and sovereign CDS, even after controlling for banks' equity performance, the latter being consistent with an effect of the quality of sovereign guarantees on bank credit risk.
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a pyrrhic victory bank Bailouts and sovereign credit risk
Research Papers in Economics, 2011Co-Authors: Viral V Acharya, Itamar Drechsler, Philipp SchnablAbstract:We show that financial sector Bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy by ameliorating the under-investment problem of the financial sector. However, increasing taxation of the non-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the sovereign's creditworthiness. This deterioration feeds back to the financial sector, reducing the value of its guarantees and existing bond holdings as well as increasing its sensitivity to future sovereign shocks. We provide empirical evidence for this two-way feedback between financial and sovereign credit risk using data on the credit default swaps (CDS) of the Eurozone countries and their banks for 2007-11. We show that the announcement of financial sector Bailouts was associated with an immediate, unprecedented widening of sovereign CDS spreads and narrowing of bank CDS spreads; however, post-Bailouts there emerged a significant co-movement between bank CDS and sovereign CDS, even after controlling for banks' equity performance, the latter being consistent with an effect of the quality of sovereign guarantees on bank credit risk.
Jakob De Haan - One of the best experts on this subject based on the ideXlab platform.
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contagion during the greek sovereign debt crisis
Journal of International Money and Finance, 2013Co-Authors: Mark Mink, Jakob De HaanAbstract:We examine the impact of news about Greece and news about a Greek bailout on bank stock prices in 2010 using data for 48 European banks. We identify the twenty days with extreme returns on Greek sovereign bonds and categorise the news events during those days into news about Greece and news about the prospects of a Greek bailout. We find that, except for Greek banks, news about Greece does not lead to abnormal returns while news about a bailout does, even for banks without any exposure to Greece or other highly indebted euro countries. This finding suggests that markets consider news about the bailout to be a signal of European governments' willingness in general to use public funds to combat the financial crisis. Sovereign bond prices of Portugal, Ireland, and Spain respond to both news about Greece and news about a Greek bailout.
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contagion during the greek sovereign debt crisis
Research Papers in Economics, 2012Co-Authors: Mark Mink, Jakob De HaanAbstract:Using an event study approach, we examine the impact of news about Greece and news about a Greek bailout on bank stock prices in 2010 using data for 48 banks included in the European stress tests. We identify the twenty days with extreme returns on Greek sovereign bonds and categorize the news events during those days into news about Greece and news about the prospects of a Greek bailout. We find that news about Greece does not lead to abnormal returns while news about a bailout does, even for banks without any exposure to Greece or other highly indebted euro countries. This finding suggests that markets consider news about the bailout to be a signal of European governments' willingness in general to use public funds to combat the financial crisis. Sovereign bond prices of Portugal, Ireland, and Spain respond to both news about Greece and news about a Greek bailout.
Mark Mink - One of the best experts on this subject based on the ideXlab platform.
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contagion during the greek sovereign debt crisis
Journal of International Money and Finance, 2013Co-Authors: Mark Mink, Jakob De HaanAbstract:We examine the impact of news about Greece and news about a Greek bailout on bank stock prices in 2010 using data for 48 European banks. We identify the twenty days with extreme returns on Greek sovereign bonds and categorise the news events during those days into news about Greece and news about the prospects of a Greek bailout. We find that, except for Greek banks, news about Greece does not lead to abnormal returns while news about a bailout does, even for banks without any exposure to Greece or other highly indebted euro countries. This finding suggests that markets consider news about the bailout to be a signal of European governments' willingness in general to use public funds to combat the financial crisis. Sovereign bond prices of Portugal, Ireland, and Spain respond to both news about Greece and news about a Greek bailout.
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contagion during the greek sovereign debt crisis
Research Papers in Economics, 2012Co-Authors: Mark Mink, Jakob De HaanAbstract:Using an event study approach, we examine the impact of news about Greece and news about a Greek bailout on bank stock prices in 2010 using data for 48 banks included in the European stress tests. We identify the twenty days with extreme returns on Greek sovereign bonds and categorize the news events during those days into news about Greece and news about the prospects of a Greek bailout. We find that news about Greece does not lead to abnormal returns while news about a bailout does, even for banks without any exposure to Greece or other highly indebted euro countries. This finding suggests that markets consider news about the bailout to be a signal of European governments' willingness in general to use public funds to combat the financial crisis. Sovereign bond prices of Portugal, Ireland, and Spain respond to both news about Greece and news about a Greek bailout.
